Bernie Schaeffer — an industry pioneer in options trading — first launched his Option Advisor newsletter back in 1981; his strategy incorporates technical, fundamental and sentiment-based strategies. Here's a look at pair of call recommendations for options traders.
Automotive retailer AN is forming a bullish symmetrical triangle pattern on the charts, after the security tested its mid-August move above the $123 level. In addition, the shares are within close reach of their all-time highs, making now an ideal time to speculate on AutoNation stock with calls.
Shorts began covering their positions in July, after an eight-month build pushed short interest to 12% of the equity’s available float. This means that shorts building their positions on AN at the moment are doing so at a loss and are therefore much more prone to cover in the event of any additional strength for the equity — particularly if shares break out above their previous highs.
RECOMMENDATION: Buy the January 20, 2023 125-strike call.
Exxon Mobil (XOM)
Oil and gas name XOM is outperforming the broader market, up 60% year-to-date thanks to a resurgent crude market. In fact, earlier this week crude broke out above a trendline connecting lower highs since June, even as hedge funds have reduced exposure to oil futures to multi-year lows.
The shares are also rallying off their 160-day moving average — a trendline that was support between November and December 2021 before the security staged a major rally. The equity’s current perch is above its late July post-earnings close and $95.29, which coincides with the round $400 billion market cap.
There is plenty of room for optimism among the brokerage bunch. Of the 28 analysts in coverage, 13 still carry a tepid "hold" rating. This means the security could still see tailwinds from a potential round of upgrades going forward.
RECOMMENDATION: Buy the December 16, 2022 97.50-strike call.